Hawk in Hock

Jacob Sullum

5/13/2009 12:00:00 AM - Jacob Sullum

Remember President Obama's New Era of Responsibility? It got off to an inauspicious start, with a $787-billion economic stimulus package, a $410-billion appropriations bill, and a record $1.8-trillion budget deficit.

But now Obama wants to signal that he's getting serious about cutting the federal budget. Unfortunately, his plan hinges on the assumption that Americans do not know how to calculate percentages.

Last week, the Obama administration, after going through the budget "line by line," unveiled $17 billion in budget cuts. That amounts to less than 0.5 percent of the president's proposed $3.6-trillion budget for the next fiscal year and less than 2 percent of the projected $1.3-trillion deficit.

On Monday, the White House raised its estimate of the budget deficit for the current fiscal year from $1.75 trillion to $1.84 trillion. The $89-billion correction was more than five times the cuts Obama had proposed four days before.

The president dismissed critics who were unimpressed by his $17 billion in savings as inside-the-Beltway snobs with no understanding of how regular people view things. "In Washington," he told reporters, "I guess that's considered trivial. Outside of Washington, that's still considered a lot of money."

White House Press Secretary Robert Gibbs used the same rhetorical strategy. "I've said this before, and I'll say it again: $17 billion is a lot of money to people in America," he said. "I understand that it might not be to some people in this town, but that's probably why we're sitting on a $12-trillion American Express bill" -- a reference to the national debt.

This is the sort of populist argument that insults the public's common sense while pretending to flatter it. Yes, $17 billion is a lot of money for an individual, a municipality, even a mid-sized state. But it is emphatically not a lot of money for a federal government that spends trillions of dollars every year. If you had $12,000 in credit card debt and paid off $17 of it, would you feel like you had made significant progress?

"These savings, large and small, add up," the president said. That is literally true; they just don't add up to much.

But wait. The $17 billion in savings Obama touted last week was on top of the cuts he had already ordered his cabinet to find. Last month, saying he was determined to make government "as efficient as possible" and ensure that "every taxpayer dollar is being spent wisely," he instructed department and agency heads to come up with a total of $100 million in savings.

Here is how The New York Times described the reaction this mandate elicited: "Budget analysts promptly burst out laughing." The fiscally conservative Republican Study Committee, perhaps fearing that the White House was right in thinking that voters can't do basic math, performed the calculation for them, dubbing the president's initiative "Obama's 0.0025 percent spending cut."

Obama also talks about $2 trillion in "savings" over the next decade, but this amount consists mostly of tax hikes and phantom reductions from unrealistically high baselines. Meanwhile, he is seeking big increases in domestic spending, especially on energy, health care and education.

This year, the Associated Press notes, "the government will have to borrow nearly 50 cents for every dollar it spends." Even with optimistic economic assumptions, the Obama administration projects budget deficits of more than $500 billion every year from 2010 to 2019, totaling $7.1 trillion in additional debt at a time when Social Security and Medicare spending will be skyrocketing due to the retirement of baby boomers -- a problem Obama has not begun to address.

"We can no longer afford to spend as if deficits do not matter and waste is not our problem," the president said last week. "We can no longer afford to leave the hard choices for the next budget, the next administration -- or the next generation." I wish that Obama had some influence on the one who is setting the administration's fiscal policy.